RSSThe Consumer Financial Protection Bureau wants to supervise large nonbanks that offer digital wallets and payment applications.
Unveiled Nov. 7, the proposed rule would cover companies handling more than 5 million transactions per year, including payment processors such as Amazon, Meta, Google, Square and PayPal.
According to the CFPB, nonbank payment processors are not subjected to the same regulatory scrutiny and oversight as banks. Though the CFPB has enforcement authority over fintech payments processors, agency examiners have not been closely scrutinizing their activities.
“Big Tech and other companies operating in consumer finance markets blur the traditional lines that have separated banking and payments from commercial activities,” the CFPB stated. “The CFPB has found that this blurring can put consumers at risk, especially when the same traditional banking safeguards, like deposit insurance, may not apply.”
The CFPB has frequently cited the risks it sees from Big Tech companies entering the payments space. In 2022, the agency cautioned Big Tech companies that they must follow consumer financial protection laws when using sophisticated behavioral targeting methods to market financial products. Earlier this year, the CFPB issued more extensive orders to gather more information on how Big Tech is using sensitive personal data.
In a speech last month, CFPB Director Rohit Chopra warned that Big Tech’s entrance into banking raises corporate espionage, tracking and censorship concerns. “I fear that the U.S. is lurching toward a consolidated market structure, like the one that has emerged in China, that blurs the lines between payments and commerce and creates the incentives for excessive surveillance and even financial censorship,” he added.
